The government started a ₹14,500 crore support scheme to boost energy storage between FY27 and FY31. This plan aims to build 92 GWh of storage capacity to save excess solar and wind power. By storing green energy, the move helps stabilize the grid and could lower electricity bills for many consumers.
What does the VGF scheme entail?
Under the scheme, financial support of ₹14,500 crore will be provided between FY27 and FY31. It aims to support 30GWh of battery energy storage systems (BESS), 60GWh of pumped storage projects (PSP) and 2GWh of emerging storage technologies. These projects, with an estimated investment requirement of ₹97,600 crore, will be allocated through a tariff-based competitive bidding process. Both public- and private-sector electricity distribution companies will be eligible for the fiscal support. To promote indigenous manufacturing, the government has mandated that BESS developers source at least 40% of their components from Indian manufacturers.
Why is energy storage important for India?
Energy storage systems are key to storing excess renewable energy for use when green power sources such as solar and wind are unavailable. As India's renewable energy generation capacity has increased, there have been instances when solar power generation exceeds demand. In the absence of storage systems, this surplus electricity goes unused. Discoms and developers resort to distress sales of power on exchanges during peak solar hours (11am–3pm), resulting in financial losses. Since solar and wind are intermittent sources of power, sudden surges or drops in supply can also destabilize the grid. Energy storage can help prevent such disruptions.
How do BESS and PSP work?
BESS stores excess electricity, largely generated from intermittent renewable sources such as solar and wind, and supplies it to the grid when generation is low. It can also help stabilize the grid by absorbing excess electricity when generation surges and injecting power when generation drops. PSPs store electricity by pumping water to an upper reservoir during periods of surplus generation. The stored water is released through turbines when electricity demand rises. While BESS can respond rapidly to short-duration requirements, supporting frequency regulation, peak management and grid balancing, PSPs provide longer-duration storage by shifting large quantities of electricity across periods of surplus and demand.
How can grid-level energy storage systems benefits consumer?
Energy storage systems integrated with the power grid will help ensure a more reliable supply of good-quality electricity. They are designed to support round-the-clock power availability, potentially reducing power cuts and improving supply reliability. Further, BESS can store relatively inexpensive renewable electricity generated during solar or windy hours and supply it when these sources are unavailable. Over time, this may lead to savings by the discoms and translate into lower electricity bills for consumers.
What is India's energy storage requirement in line with its energy transition plans?
As renewable energy capacity expands, the requirement for energy storage is also expected to increase rapidly. According to the government, India will require 411GWh (73.93GW) of grid-scale storage capacity by 2031-32. The Central Electricity Authority (CEA) projects that, of the 73.93GW of storage capacity required by 2031-32, 26.69GW will come from PSP and 47.24GW from BESS. CEA's long-term resource adequacy plan projects a requirement for 888GWh of energy storage by 2035-36, comprising around 80GW of battery storage and 94GW of pumped hydro storage capacity.
Rituraj Baruah
Rituraj Baruah is a special correspondent covering energy, housing, urban affairs, heavy industries and small businesses at Mint. He has reported on diverse sectors over the last eight years including, commodities and stocks market, insolvency and real estate; with previous stints at Cogencis Information Services, Indo-Asian News Service (IANS) and Inc42.